The winds and rain of February 21, 2023, on the east coast of the Big Island, resulted in loss of life and property damage estimated at $481 million.
In Madagascar, according to the National Office of Risk and Disaster Management, the passage of Cyclone Freddy affected more than 120,000 people, caused the death of ten individuals, destroyed more than 10,000 houses and schools, but also forced at least 45,000 people to move.
In response, the African Risk Capacity (ARC) Group and the African Development Bank (AfDB) have disbursed $1.5 million under the ARC Replica Initiative, an innovative risk financing solution extended to humanitarian organizations.
In detail, the Malagasy government received $1.2 million and the World Food Program (WFP) $300,000. In fact, these are insurance indemnity checks, as two separate insurance policies were taken out during the 2022/2023 cyclone season with ARC Limited, the insurance subsidiary of the ARC Group, an international finance and consulting company.
Madagascar’s participation in the ARC risk pool was made possible by the African Disaster Risk Financing (ADRiFi) program, collaboration between the AfDB and the ARC Group. “The AfDB, through the ADRiFi program, helped the Malagasy government to pay insurance premiums amounting to US$ 3.5 million. These subscriptions generated a total disbursement of $15 million from ARC Group in the form of indemnity payments,” said Adam Amoumoun, the financial institution’s Country Manager for the Red Island.
Lesley Ndlovu, Executive Director of ARC Limited, said the new payment, which will allow “the government of Madagascar to reach the most vulnerable communities and help the country rebuild,” also demonstrates “the value of sovereign insurance as a valuable tool for building a country’s resilience to climate threats.”
According to Pasqualina Di Sirio, PAM’s Representative in Madagascar, “the increased frequency and intensity of climate shocks exacerbate the vulnerability of populations, particularly in the southern and eastern regions of Madagascar.”
Rindra Hasimbelo Rabarinirinarison, Madagascar’s Minister of Economy and Finance, corroborates this observation: “We are aware that our country is subject to climate disasters, the frequency and intensity
of which have continued to increase in recent years. The damage caused is more violent and the associated costs are increasingly high.”
That is why, he added, “the government is ready to take the necessary steps to continue its commitment to ensure the sustainability of this insurance mechanism as an instrument adapted to the context of the country’s vulnerability to climate hazards. ”
ID/ac/fss/abj/APA